City Journal

Max Schulz

The Green-Jobs Engine That Cant

Inefficient eco-friendly technologies destroy more jobs than they create.

Winter 2009

During the 2008 presidential campaign, Barack Obama promised to transform Americas energy economy by creating millions of green jobs. Accepting his partys nomination at the Democratic convention in Denver, Obama proclaimed: Ill invest $150 billion over the next decade in affordable, renewable sources of energywind power and solar power and the next generation of biofuels; an investment that will lead to new industries and 5 million new jobs that pay well and cant ever be outsourced. This new energy economy, Obama explained weeks later at the second presidential debate in Nashville, would be an engine of economic growth to rival the computer and one, moreover, that we could build easily. Though he would have quibbled with Obama over details, Republican candidate John McCain similarly praised the virtues of creating millions of these environmentally friendly jobs, both as an answer to the nations economic woes and as a way to reduce carbon emissions.

In a time of grave economic uncertainty, its surely positive news that we can agree on the benefits of green jobs, right? Not quite. If the green-jobs claim sounds too good to be true, thats because it is. Holding it up to the light exposes it as economically hollow. Making matters worse, a powerful green-jobs movement has emerged, made up of left-wing antipoverty activists and union leaders, all of them clamoring for a more conventional kind of green: government dollars.

What exactly is a green job, anyway? The definition seems maddeningly vague. According to Time, if you make wind turbines or solar panels, your job is reliably green. But the American Solar Energy Society (ASES), a leading proponent of the cause, says that green employment isnt reserved for scientists and researchers; the industry also needs project managers, accountants, assemblers, IT professionals, customer service reps, marketing professionals and account executives. ASES estimates that more than 8 million people already work in the field of renewable energy and energy efficiency, and it predicts that figure to quadruple by 2030. But ASES acknowledges that no real standards exist for what constitutes a green job, so these numbers are fuzzy. Work in an energy-intensive smelting plant producing steel for a wind turbine, and you might wind up in the green-jobs column, despite the belching pollution. According to the Political Economy Research Institute, a left-wing think tank, even truck driving could be green, since long-haulers will be in demand to transport wind turbines as well as switchgrass and woodchips for biofuels.

Obama has yet to provide much in the way of particulars on his green-jobs agenda, though he has proposed a renewable portfolio standard that would require 25 percent of our electricity to come from clean sourcesa move that would boost demand for windmills, solar farms, and other clean but expensive technologies (clean nuclear power, reviled by environmental groups, would be excluded). Obama has also announced a massive new national-infrastructure and public-works agenda that would foster green jobs.

The paucity of details to date isnt surprising. For all the talk about green-job creation, theres an unavoidable problem with renewable-energy technologies and the policies that promote them: from an economic standpoint, theyre big losers. Renewables cant produce the large volumes of useful, reliable energy that our economy needs at attractive prices. Government subsidizes renewables becauseall things being equalthe free market wont. In many cases, these subsidies amount to little more than welfare for companies and industries with political connections.

The green subsidies are considerable. The U.S. Energy Information Administration reported in early 2008 that the government subsidizes solar energy at $24.34 per megawatt-hour (MWh) and wind power at $23.37. Yet even with decades of these massive handouts, as well as numerous state-level mandates for utilities to use green power, wind and solar energy contribute less than one-half of 1 percent of our nations electricity. Compare the green energy subsidies to the energy sources reviled by environmentalists, such as natural gas (25 cents per MWh in subsidies), coal (44 cents), hydroelectricity (67 cents), and nuclear power ($1.59). With relatively little government largesse, these sources (along with oil, which undergirds transportation) do the heavy lifting in our energy economy.

The alternative technologies at the heart of Obamas plan, relying on more such government handouts and mandates, will inevitably raise energy pricesand high power prices are job killers. Industries that make physical products, whether cars or chemicals or paper cups, are energy-intensive and will gravitate to low-energy-cost localeswhich is why California and New York, with some of the highest electricity prices in the country, have lost manufacturing jobs in droves. But its not just manufacturers that need cheap electricity: Google, the poster child of Californias information-technology economy, houses its massive server farms not in the Golden State but in places with lower electricity costs, like North Carolina and Oregon. Policies that drive up energy costs across the nation, as Obama intends, will drive many of these jobs not elsewhere in the country but overseas.

Keep in mind, too, that the traditional industries currently supplying Americans with reliable, affordable energy already employ millions of workers. The American Petroleum Institute reports that the oil and gas industry employs 1.6 million Americans. Coal mining directly and indirectly supports hundreds of thousands of jobs, according to the National Mining Association and the U.S. Bureau of Labor Statistics. A radical plan to transform our energy economy in favor of clean, renewable energy technologies would put many of those men and women out of work.

But wont all those new green jobs make up for whatever economic hardship results? Thats the contention of New York Times columnist Thomas Friedman, among the best-known and most influential evangelists for a green economy. In his most recent bestseller, Hot, Flat, and Crowded: Why We Need a Green Revolutionand How It Can Renew America, Friedman argues that a government-directed green program would rebuild Americas national strength and bolster our economy for the twenty-first centuryregardless of whether global warming turns out to be a serious problem (which he believes it is). Friedman likens his proposal to training for the Olympic triathlon. If you make it to the Olympics, you have a much better chance of winning, because youve developed every muscle, he writes. If you dont make it to the Olympics, youre still healthier, stronger, fitter, and more likely to live longer and win every other race in life.

Its a nice analogy, but Friedman, like Obama, sees only the upside. Danish economist Bjørn Lomborg, author of books like The Skeptical Environmentalist and Cool It, which decries climate-change alarmism, agrees that global warming is real and man-made, but he differs with Friedmans response. It is foolish to deny climate change, says Lomborg. But its also foolish to deny climate economics, which Friedman does. Lomborg notes that Friedmans argument simply fails to address the cost of his proposed solutions, and fails to weigh those costs against the benefits.

Obama and Friedman have become the latest proponents of a common economic fallacy. One version holds that the Second World War and its aftermath were a boon for the American and European economies, since militarizing in America and rebuilding Europe spurred much-needed economic activity. Economist and New York Times columnist Paul Krugman peddled another version when, shortly after the 9/11 attacks, he suggested a possible silver lining: the destruction of the World Trade Center would require new construction and therefore reinvigorate economic activity downtown.

Such thinking was effectively debunked a century before World War II. The nineteenth-century French economist Frédéric Bastiat made an invaluable contribution to modern economics by demolishing the notion that a broken window is a good thing inasmuch as it provides work for the glazier. As Bastiat observed, the money that goes to pay the glassmaker would, had the window never been broken at all, have supported some other productive enterprise. Society as a whole winds up poorer, even if the glassmaker profits.

With his promise of 5 million new green jobs, Barack Obama heaves a brick straight through Bastiats window. Yesterdays glazier is tomorrows solar-panel installer. The green-jobs promise amounts to killing jobs in efficient industries to create jobs in inefficient oneshardly a recipe for economic success. William Pizer, a researcher with Resources for the Future and a lead author of the most recent report from the United Nations Intergovernmental Panel on Climate Change, reinforced the point at a symposium last April: As an economist, I am skeptical that [dealing with climate change] is going to make money. Youll have new industries, but theyll be doing what old industries did but [at] a higher net cost. . . . Youll be depleting other industries. Consumers will be hurt, too, Pizer notes. Digging deeper each month to pay for expensive renewable energy, they will have less to save or spend in other areas of the economy.

There may be legitimate arguments for taking dramatic steps to fight climate change. Boosting the economy isnt one of them.

Higher costs and job losses arent the only drawbacks of the green-jobs push. We also must contend with a burgeoning activist movement that is mobilizing around the idea of a green economy. Many of these activists come from self-styled environmental organizations, but some arent typical environmentalists in any sense of the word. These unlikely eco-cadreslargely composed of labor union officials and inner-city community organizersappear far less interested in protecting the environment than in agitating for economic justice and airing ethnic, racial, and other grievances.

That was the case with many of the participating organizations involved in the nationwide Green Jobs Now National Day of Action last September. The list of partner organizations reads like a roll call of left-wing activism. Most of the major environmental organizations were there, such as Greenpeace, the Sierra Club, and the Natural Resources Defense Council, along with many lesser-known groups. But so were numerous decidedly non-environmental outfits, including the well-known Acorn, MoveOn, and Codepink. Color of Changean organization dedicated to strengthening Black Americas political voicewas on hand, as was the Hip Hop Caucus. Democracia USA sought to mobilize Hispanics, while numerous union locals boosted turnout at various sites around the country.

Inner-city Oakland may well be the heart of this new movement. Mayor Ron Dellums, formerly one of Congresss most left-wing legislators, has pioneered the Oakland Green Jobs Corps (OGJC), which began dispersing money this fall for eligible groups to run so-called green-job-training programs. According to OGJC documents, The program will have a special focus on providing green pathways out of poverty by recruiting and training people with barriers to employment (e.g., lack of job skills, lack of education, language/cultural barriers, or history in juvenile/criminal justice system).

Dellums had help from an Oakland-based community activist named Van Jones, who played a large role in persuading Congress to pass a Green Jobs Act in 2007 that will soon start funneling more than $125 million to antipoverty and environmental groups across the country. Jones is perhaps the leading proponent of harnessing the green-jobs wave to benefit low- or no-skilled candidates, many with troubled backgrounds. A relentless self-promoter, he has had a hand in starting or directing many of the best-known green-jobs advocacy groups: Green for All, the Apollo Alliance, Color for Change, and the Ella Baker Center for Human Rights. He is also a skilled quotesmith who has become a go-to guy for reporters looking to add flavor to stories about the environment. He often talks about the green economy being not just for the Ph.D., but also for the Ph.-do. Friedman profiles Jones in Hot, Flat, and Crowded and records this Jones aphorism for disaffected youth: You can make more money if you put down that handgun and pick up a caulk gun. Jones has written his own book, The Green Collar Economy, which promises both to rescue the economy and to save the environment (all for just $25.95).

Reading Joness book or the many interviews he has given, one gets the impression that he is passionately committed to the environment. He talks up the need for a green New Deal, for instance, that will help our Rust Belt cities blossom as Silicon Valleys of green capital. But scroll through the websites and reports of the many organizations with which hes been connected, and one begins to suspect that this green commitment is less about nature than about welfarefor inner-city residents without the skills or knowledge to compete in a twenty-first-century economy, and for the professional poverty organizations that collect the money for government job-training programs.

If Jones and his compatriots in the green-jobs movement truly wanted to help poor minorities, they might start by taking a long, hard look at the history of government-run job-training programs. In terms of money wasted, skills not imparted, and opportunities lost, the history of such programs is abysmal. Many, if not most, of the participants in federal jobs and job-training programs would be better off today if the programs had never existed, observes journalist James Bovard, who has written extensively on the failures of job-training efforts. The primary beneficiaries of federal jobs programs have been the legions of social workers, consultants, and manpower experts that have made a good living off these flounderings for 25 years. Bovard made those remarks in 1986; they are no less relevant today.

It would be comforting to think that the new Community-Organizer-in-Chief has better sense on the green economy than his Oakland counterparts. If he does, hell recognize that the best way to a greener, more prosperous future would be for the government simply to set goals and parameters for the private sector, and then step aside and let the market work. That might mean instituting a carbon tax or a greenhouse-gas-emissions cap-and-trade program. It might even mean banning new coal plants outright. What it emphatically does not mean is spreading around yet more taxpayer wealth to uneconomic industries and establishing make-work programs for parolees and high school dropouts.

Max Schulz is a senior fellow at the Manhattan Institutes Center for Energy Policy and the Environment.